Kicking off the ninth (can you believe it?) Advertising Week, the Interactive Advertising Bureau, at its IAB MIXX Conference, has released new research conducted by the Harvard Business School that found the ad-supported internet is responsible for 5.1 million U.S. jobs. The sector increased 100 percent over the past four years and contributed $530 billion to the U.S. economy in 2011, double that of 2007. In addition, the sector accounted for 3.7 percent of the U.S. gross domestic product.

The report shows New York and California as home to the headquarters of the largest number of U.S. internet firms. This, of course, is due to the prominence of Madison Avenue and Silicon Valley as digital business hubs. In addition, Washington, Massachusetts, and Illinois are the next three most digital-friendly states. In total, nine states are the sites of headquarters that account for 72 percent of attributed employment, although the jobs themselves were dispersed across other states in the union:

State

Number of Firms Headquartered in the State

Number of Employees Whose Firms are Headquartered in the State

New York

102

239,000

California

128

215,000

Washington

24

64,000

Massachusetts

29

60,000

Illinois

22

38,000

Minnesota

10

29,000

Pennsylvania

11

28,000

Arkansas

3

26,000

Colorado

8

19,000

In line with previous reports, every congressional district in the U.S. was home to at least a handful of companies within the internet ecosystem and many had thousands of such companies. The services that support internet entrepreneurs have allowed businesses to be sited far from the traditional centers of industrial employment.

Montana, for example, a state best known for agriculture, supports more Internet ecosystem businesses (from one-man shops to larger companies) than New York City's 8th congressional district, which constitutes the majority of Manhattan's west side and southern tip, as well as parts of Brooklyn.

Sole proprietors and very small firms were cited as big winners:

- They contributed 375,000 full time equivalent jobs to the 2 million in the internet ecosystem.

- Many were selling on Amazon, eBay and Etsy. Many others were self-employed web designers, writers and programmers.

- App development alone accounted for 35,000 full-time equivalent jobs, and the number of moonlighters was an order of magnitude larger.

- Job creation was highly dispersed, with less growth in aggregate and in percentage terms in the megaplexes of Google, Microsoft and Yahoo! than in the tiny entrepreneurial ventures across every state and county which, themselves, are enabled by cloud computing, merchant platform services such as Amazon, brokers such as Craigslist, advertising media like YouTube, small finance providers like Kickstarter, payment facilitators such as Square, and social networks, recommendation engines, and search engines that have helped small sellers to find customers even though they lack the resources to build broadly recognized brands.

The biggest increase in jobs over the four-year period was seen within the infrastructure (300%) and consumer support service (229%) layers, although consumer services still ranks as the area with highest employment number (885,000).

The ad-supported digital industry directly employs 2 million Americans, and indirectly employs a further 3.1 million in other sectors.

Layer

2007 Direct Employment

2011 Direct Employment

Percent Growth

Infrastructure

140,000

420,000

300%

Infrastructure Support

165,000

254,000

54%

Consumer Support Services

190,000

435,000

229%

Consumer Services

520,000

885,000

65%

TOTAL

1,015,000

1,999,000

197%

Of these growth areas, Harvard Professor John Deighton said, "One of the most striking findings of this report is that growth was fast in the consumer-facing layer but that it was even faster in the less glamorous infrastructure layer that supports the high-profile brand name sites and services. Jobs grew fastest in digital advertising agencies, ad networks, ad exchanges, customer analytics firms, and listening platforms. The engine of growth was not just consumer-facing companies like Facebook, Twitter and YouTube, but also firms that used the data spun off by them."

And of the the overall growth cited in the study, IAB CEO Randall Rothenberg said, "The rapid growth of the ad-supported internet has become a major driver in the U.S. economy. All this, despite a challenging economic climate. With encouragement from regulators and legislators in Washington, D.C. and other world capitals, there is no doubt that the interactive marketplace will bring an even greater number of jobs into the fold - not only in America, but across the globe providing strong economic value in the years to come."